Determining a trading time-frame

This is a difficult question to answer. Some analysts stereo-type certain markets as being effective for day trading, while other markets are more effective to trade on a longer term basis.

Our opinion is that, if we are technical analysts, with few exceptions, a chart is a chart, is a chart, is a chart; more specifically, a 10 minute, 15 minute, 30 minute, 60 minute, daily or weekly chart should look similar.

As a rule of thumb, if you are trading in time-frame “T”, you can derive a directional bias from time-frame “T + 1″. Your entries can be derived from time-frame “T – 1″.

For example, if you are making a trade based on a signal from a daily bar chart, it is assumed that your direction was formulated from a weekly bar chart, or weekly time-frame.

Your entries for a daily bar-chart can then be made using a shorter time-frame; for example, you could use a 60 or 30-minute time-frame for entry signals.

In summary, if you trade a daily time-frame “T” (daily bar chart), then you should derive your entry bias (you only take buy trades or only take sell trades) using a weekly time-frame (“T + 1″).

Once you have formulated your daily bias using the weekly time-frame for long-term directional bias, then you are looking to enter the market using a daily bar chart and seek to make entries in the direction of the longer term bias (“T + 1″), where “T” = the daily time-frame.

To determine what time of day to enter a trade, seek to use a time-frame of “T – 1″ (in this case, we are looking at 60 or 30-minute bar for our entry point).